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The effects of public pensions on private wealth: evidence on the German savings puzzle

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  • Sangho Kim
  • Rainer Klump

Abstract

Based on German panel data between 1984 and 1999, we test for the interaction of social security benefits and private wealth formation. In a simple life-cylce model benefits from public pension systems should displace equal amounts of private retirement accumulation. Our estimate for the offset effect, corrected for several possible measurement biases, is much lower, however, than expected from pure life-cycle considerations and less than comparable estimates for the US and the UK. This result thus supports other evidence on a particular German savings puzzle, which might be due to market imperfections and/or bounded rational behaviour.

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  • Sangho Kim & Rainer Klump, 2010. "The effects of public pensions on private wealth: evidence on the German savings puzzle," Applied Economics, Taylor & Francis Journals, vol. 42(15), pages 1917-1926.
    • Handle: RePEc:taf:applec:v:42:y:2010:i:15:p:1917-1926
    DOI: 10.1080/00036840701749027
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    Cited by:

    1. Xiaoyu Deng & Jing Tian & Rong Chen, 2019. "Effect of Social Security System on Consumption through Income and Uncertainty: Evidence from China," Sustainability, MDPI, vol. 11(7), pages 1-16, March.
    2. Mathieu Lefebvre & Sergio Perelman, 2016. "Social security wealth and household asset holdings: new evidence from Belgium," Working Papers of BETA 2016-38, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.

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